Signify, the world’s largest lighting company, today withdrew financial guidance for 2020, joining hundreds of other companies from across many industries that have warned of major financial consequences from the coronavirus pandemic.
“Given the high level of global uncertainty and the very limited visibility on how this crisis might unfold, Signify has decided to suspend its financial outlook for 2020 as announced on January 31, 2020,” the company said in a press release today.
The guidance that the company had issued two months ago was that it would achieve further improvements in adjusted EBITA margin and would deliver a free cash flow of at least 6% of sales in 2020.
At the time, CEO Eric Rondolat cautioned that the coronavirus could disrupt financial results. Since then, the virus has spread to become a world health crisis, with the World Health Organization declaring it a pandemic and industries of all sorts closing operations to fight the disease.
Signify had earlier this month raised prices to offset supply chain difficulties. But unlike the lighting industry’s second-largest company, Osram, Signify had not altered its financial outlook. That changed today.
“The COVID-19 pandemic is unprecedented in its scale and the challenges it presents,” Rondolat said. “Our number one priority is the health, safety, and wellbeing of our employees, customers, partners, and the people around us. Very early on, we established teams, centrally and locally, to monitor the situation, respond quickly and act appropriately, adhering to the advice of governments and local authorities. Special teams are also in place to minimize the impact on deliveries and service levels to our customers and partners.
“As uncertainty remains high and visibility low, prudence is warranted. We want to make sure that we safeguard our flexibility to react to changes in market conditions and guarantee the stability of the business. We continue to closely monitor the development of COVID-19 and to identify additional mitigating actions.”
In another financial ramification, Signify also withdrew a proposal to pay a dividend of €1.35 ($1.49) per share, noting that “once market conditions have stabilized, Signify will revisit its capital allocation to shareholders.”
And while it plans to go ahead with its May 19 annual general meeting, Signify encouraged shareholders to attend via a live video webcast, to submit questions in advance, and to vote by proxy. “Signify may take, or may be required to take, additional precautionary measures to protect the health and safety of all stakeholders involved in the AGM,” the company said.
It also postponed a June 18 gathering of analysts in London until an undetermined date.
Signify operates on a calendar year. As reported on Jan. 31, full year 2019 net income inched up 2.3% to €267M ($295M) from €261M ($289M), although sales fell 1.8% to €6.25 billion ($6.91B) from €6.36B ($7.03B), and comparable sales declined 4.6%. The company at the time cited “continued rigorous implementation of cost reduction initiatives,” which helped explain how it profited in the face of declining sales. Adjusted EBITA improved by 0.03% to 10.4%, an increase that was not as high as its originally anticipated 11‒13% range, but which met the company’s lower expectations, reset three months ago.
On a related note, Signify published a separate statement on its website saying it decided to not participate in the rescheduled Light + Building (L+B) tradeshow, which organizers had postponed over coronavirus concerns from the original Mar. 8‒13 dates until Sept. 27‒Oct. 2.
“After careful consideration we have decided not to participate in Light + Building 2020 in September,” Signify said. “There were many factors informing our decision not to participate. These of course include the on-going situation with the coronavirus pandemic, and also the fact that we want to communicate about our innovations to our customers and partners in a more timely manner. Therefore, we are now looking at various options on how to optimally engage with them over the coming months. Stay tuned for more information.”
MARK HALPER is a contributing editor for LEDs Magazine, and an energy, technology, and business journalist ([email protected]).
